Chicago general obligation bond prices have dropped precipitously since the start of the year, according to the Center for Municipal Finance's muni indices.

Chicago's GOs dropped to 117.23 on Jan. 22, from 120.56 on Jan. 15, 125.63 on Jan. 8, 129.46 on Jan. 2, and 130.85 on Dec. 24, according to the Center for Municipal Finance. That's a 10.4% drop over less than a month.

The indices, which use data from Municipal Bond Information Services, show the weighted average price of the rest of CMF's GO bond index up 6% this year.

"You absolutely heard things leading into the start of 2026 about some potential concerns about Chicago's credits," said Justin Marlowe, research professor at the University of Chicago's Harris School of Public Policy and director of the center. He cited the acrimony over the budget and various City Council disputes, "including, most recently, just basic credibility about numbers, about the advanced pension payment and whatnot.

"None of that is good for investor perceptions," Marlowe said.

Stressing it was merely speculation, Marlowe added CFO Jill Jaworski's departure may have played a role.

"When you look at our data, the year-over-year change in the overall index, I think it's up 23%," Marlowe said, but "Chicago has been really flat." So, until recently, it seemed Chicago was just "missing out on these drastically improving market conditions."

But the latest price moves are "startling," he added, despite some analysts predicting for some time that "investor sentiment would at some point go from, 'Let's wait and see,' to 'Okay, I don't like what I'm seeing. I'm getting out.'"

"It's not terribly surprising that there'd be concern over Chicago," said Lisa Washburn, chief credit officer and managing director at Municipal Market Analytics.

Heading into December, she said, there were two things that needed to happen: Chicago needed to pass a budget and to make the advance pension payment in full.

"But now you have the mayor acting on the discretion that he has as to how to implement the budget, and making half the payment, which may give people in the market pause over what's to come, and will that other [half] payment be made?" Washburn said. "If there's concern that the budget is not going to be enacted in the way that was intended, that raises more worry that the rating may come under pressure."

She also pointed to a number of negative news stories about Chicago in recent weeks and said Jaworski's exit "adds another degree of uncertainty" from investors' perspective.

A Monday report from the Civic Federation called attention to the broader fiscal trends in Chicago and criticized the city's 2026 budget, which it said "represents another year of budgeting on the margins while leaving unaddressed the city's mounting structural deficit."

The nonprofit praised the budget passed by the City Council for making the full advance pension payment but said the spending plan "still relies on a shocking amount of new borrowing for operating costs, as well as an unprecedented [tax increment financing] surplus sweep," while doing little to address spending.

The combination of borrowing for operations and uncurbed spending "is likely to hurt the city's credit rating," bringing higher debt service costs, the fiscal watchdog said.

The budget "puts the burden entirely on taxpayers while exempting labor," it added, noting Chicago's budget, excluding grant funds, increased 40% since 2019.

Chicago's GO bond prices began to cheapen in September, with some tying the decline in price with a deal from the Chicago Public Schools. In November, Goldman Sachs ( GS ) had to take down $75 million of unsold bonds from a deal on the AAA-rated Sales Tax Securitization Corp. credit.

Going forward, Washburn will watch "for other signs that the implementation of the budget is deviating from the enacted budget and what the implications of that are."

Marlowe said, "you could certainly see a reversal" of the current trend if Mayor Brandon Johnson and the City Council can repair relationships and work cooperatively on implementing the budget.

"For the most part, the debt management team has done a good job and continues to do a good job behind the scenes, trying to tell that credit story, trying to get the word out among investors," he said. "But at some point, the other headlines (have an impact), when you have the City Council and the mayor in open warfare. That doesn't help."

The city's finance team did not respond to a request for comment by press time.

Fitch Ratings rates Chicago A-minus with a negative outlook.

KBRA rates Chicago's GOs A-minus with a negative outlook. Moody's Ratings rates Chicago Baa3 with a stable outlook.

S&P Global Ratings assigns the city's GO bonds a BBB rating. The rating agency revised its outlook to negative in November.